Those irresponsible borrowers are not getting off scot-free

[Gutenberg]

Contrary to what many conservatives are saying, the H4H program--"Hope for Homeowners" is not a giveaway program for the irresponsible. People who refinance their loans using the government guarantee program end up paying at least half the equity in their home with the government, no matter when they sell the home.

The big benefit is they get to keep their home, and the lender cannot put them into another adjustable-rate mortgage. There is a big however, however.

Suppose the home is worth $200,000. The lender can lend up to 90 percent of the value of the home under the program. OK, that's $180,000 and there's $20,000 of equity there. If the homeowner sells in the first year, all of the equity goes to the FHA. Every year through year five the FHA's share of the equity goes down 10 percent. After that, the FHA gets 50 percent of the equity, including appreciated value, no matter what--even after the mortgage is paid off.

So it's not a freebie--it's really rather expensive.

Source: http://www.washingtonpost.com/wp-dyn/con...c-business

[MacMagus]

So, citizens who need help with their mortgages will owe 50% of the home's value to the government even after the mortgage has been paid off and they can't explore other finance options after going for one of those loans.

Yet, to address the same problem, the treasury gave $25 billion to a corporation -- Bank of America -- and the only strings attached were that cash compensation to their CEO (currently receiving $25 million in various benefits, but not much of that in cash) can't exceed $500,000.

That's incredibly offensive.

Who in congress voted for that bill?

[Gutenberg]

Whoa nellie there, Mac. The government also got an equity position in B of A.

The government is driving a hard bargain. It doesn't sound so much like a bailout anymore.

[MacMagus]

> The government also got an equity position in B of A.

Non-voting shares with no dividends and no buy-back value.

What's that worth?

[Seacrest]

Equity position, my keister.
The banksters will find ways to get around giving up any of the upside back to the taxpayers.

The nation (and the media who tell us what to think) has an extremely short attention span, and by the time any "profits" are generated from this fiasco, there will be enough clamor by the chattering classes at how "unfair" and "socialistic" it is to "force" the poor "free market capitalists" to give up the wealth they "created" back to the "evil" state (read: the taxpayers from whence it came). This assuming most of the populace will even be paying attention at that point. I'm sure there will be other manufactured irrelevant celebrity escapades dominating the airwaves by the time the bill for the bailout comes due.

All this bailout nonsense, at its core, is reallocation of resources from those who work and save and invest for the future to those who gamble and speculate and splurge in the now*. That goes for everyone involved, from BoA HQ in Charlotte, NC to Aunt Bea who refinanced her 2BR cottage in Mayberry, NC six times until she was in debt up to her friggin' ears.

*not to mention a big FU from the Baby Boom generation to their kids, grandkids, great-grandkids, great-great-grandkids, etcetera, ad nauseum, arbusto.

[Black Landlord]

MacMagus wrote:
So, citizens who need help with their mortgages will owe 50% of the home's value to the government even after the mortgage has been paid off

No, 50% of the initial equity, plus 50% of any appreciation minus closing expenses and a percentage of improvement costs.

[Black Landlord]

Anyone here ever tried to get an FHA loan? The special inspections and requirements are a PITA. A lot of the properties in my neighborhood wouldn't qualify, period, due to non-conforming layouts, bathroom configuations, etc.